Employers offered guidance on new pension regulations

28 Jul 11

The Pensions Regulator has issued guidelines for employers on how to deal with the upcoming new mandatory, auto-enrolment workplace pension scheme.

Under the scheme, between October 2012 and September 2016 employers will be required to enrol automatically all their employees, except where they are already part of a fund, into a qualifying pension scheme.

Employers will be expected to make a minimum contribution of an employee's qualifying earnings into the scheme (the contribution will be increased in phases).

The online guidance allows employers to find out more details about when the changes to pensions law will affect them, which staff need to be automatically enrolled into a pension scheme, how to automatically enrol staff and how much they will need to contribute to their staff's pension.

Steve Webb, the pensions minister, said: "We know that easing burdens on small employers will be key to making automatic enrolment a success. That is why I'm very pleased that the regulator's new tools will be a simple and practical way for small businesses to learn about their duties."

Malcolm Small, senior adviser on pensions policy at the Institute of Directors, commented: "We welcome the guidance on auto-enrolment into pension saving from the Pensions Regulator, which will provide real help to employers seeking to understand the new duties falling on them from next year.

"However, the guidance also puts into sharp focus the scale of the administrative challenge facing employers, and particularly smaller employers, as auto-enrolment comes in. With over 45 different 'staging dates, for example, employers will struggle in many cases to comply with their new duties, even before they get to how to auto-enrol, and re-enrol, employees into pension saving, never mind how to deal with those who want to opt out. We suspect that many employees will want to do just this - opt out - and recent research suggests employers expect this to happen.

"At least employers can now get a good picture using the guidance of the challenge in front of them."